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Economics of Cover Crops: A Single-Year and Multi-Year Analysis Without Grazing
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This decision tool contains two different worksheets:
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Farm Information
For entering data and analyzing the single-year and multi-year projected economic costs and benefits of cover crops on a field
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Detailed Multi-Year Analysis
To see details of how costs and benefits change from year to year of cover crops on a field
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Directions: Go to the "Farm Information" tab. Input your farm's information in the yellow cells on the right. Each of the yellow cells must be answered for the calculator to work. Do not enter information into the white cells on the right, they will automatically calculate values based on the information you enter in the yellow cells.
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Notes: This tool assumes a corn/soybean rotation. Select the cash crop you will plant the summer before planting your first cover crop on the field then the tool will autopopulate based on that answer. This tool is not for whole-farm analysis, it is for one field only. All costs are calculated on the per-acre level. The calculations on the right portray the economic impact of cover crops in year 1 of establishment. The bottom of the worksheet calculates the multi-year economic impact, considering the net present value of both 5-year and 10-year spans. Cash crop yield benefits due to the cover crop are calculated in the multi-year analysis according to the yield increases calculated by the Sustainable Agriculture Research and Education (SARE). For more information about SARE's analysis of the economics of cover crops go to www.sare.org/covercrops. A detailed look at the multi-year analysis is on the next worksheet, "Multi-Year Analysis, Detailed". Complete the "Farm Information" worksheet first.
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NPV Analysis: This section calculates the total cost increase or decrease from cover crops. In the "Farm Information" tab, a one-year analysis is calculated in line 81, a 5-year analysis is calculated in line 82, and a 10-year analysis is calculated in line 83. Net present value is the sum of each year's cash flows, discounted by a 2.5% inflation rate to account for money's decreasing value over time. A positive NPV is desirable and a negative NPV is not.
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Authors: Katherine Wilts Johnson, UMN Extension Economist,
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William Lazarus, UMN Professor and Extension Economist, and
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Joleen Hadrich, UMN Associate Professor and Extension Economist
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Last updated 11/10/2021
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